We all know that growth stocks have performed well over the past few years, especially over the spring and summer of 2020. While many stocks have hit all-time highs and are trading at sky-high valuations, I thought I'd see if I could find growth stocks that still have plenty of room for growth. There are multiple ways to find growth stocks with room to grow, such as growth at a reasonable price, otherwise known as GARP.
Another way is to look at stocks compared to their price targets based on Wall Street sell-side analysts' consensus. Wall Street analysts are responsible for covering a select group of stocks. Their coverage provides in-depth research on a company's current financial situation and prospects, which give the basis for their stock ratings and price targets.
A new feature of our proprietary POWR Ratings is the Price Target, an average of target prices from analysts covering the stock. It also provides a stock's Upside Potential, which is the percentage a stock could gain to meet its price target. Investors can plug in a stock symbol and get its upside potential. I searched for growth stocks and found four with a huge upside that includes Alexion Pharmaceuticals, Inc. (ALXN), Newmont Goldcorp Corporation (NEM), Sanofi (SNY), and LKQ Corporation (LKQ).
Alexion Pharmaceuticals, Inc. (ALXN)
ALXN specializes in developing and marketing drugs for rare, life-threatening medical conditions. The company had a strong quarter where it beat estimates for both earnings and revenue on the back of its drug Solariris. The drug is currently approved for paroxysmal nocturnal hemoglobinuria, atypical hemolytic uremic syndrome, generalized myasthenia gravis, and neuromyelitis optica spectrum disorder.
The company has been looking to expand the drug label, which should further boost its sales. While the drug may face competition in a few years, ALXN will be able to convert eligible Soliris patients to the company's next-generation drug, Ultomiris. Ultomiris is already approved for paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome. ALXN is also evaluating Ultomiris as a COVID treatment.
ALXN has a strong history of sales growth, with revenue up 23.8% last year. As of Monday's close, the stock had a potential upside of 19.66%. The stock is rated a "Strong Buy" in our POWR Ratings system. It holds a grade of "A" for Trade Grade, Buy & Hold Grade, and Peer Grade, three out of the four components that make up the POWR Ratings. ALXN is also the #1 ranked stock in the Biotech industry.
Newmont Goldcorp Corporation (NEM)
NEM is the world's largest gold producer. Last year, the company produced 6.3 million attributable ounces of gold. NEM has benefited from higher gold prices due to market volatility and economic uncertainties. It is also poised to gain from a number of its projects, including the Ahafo mill expansion, Subika Underground, and the Tanami expansion.
Recent deals have also positioned the company for strong growth. Last year, NEM acquired Goldcorp and recently announced a joint venture with Barrick Gold (GOLD), which would combine both companies' assets in Nevada. The venture with GOLD creates the world's largest gold complex and has the potential to deliver $500 million in annual synergies.
NEM saw a 25.6% increase in sales last year and is expected to grow 19.8% next year. Earnings are expected to grow 72.9% next year as well. Not too bad for a company with a potential upside of 31.97%. NEM is rated a "Buy" in our POWR Ratings system with a grade of "A" in Peer Grade and a "B" for Trade Grade and Buy & Hold Grade. The stock is also ranked #1 in the Miners – Gold industry.
SNY develops and markets drugs with a concentration in oncology, immunology, cardiovascular disease, diabetes, and vaccines. The company has been benefiting from strong uptake of Dupixent and its label expansion. Dupixent is a monoclonal antibody used for allergic diseases such as eczema, asthma, and nasal polyps. The drug has been driving the company's top-line growth.
The company also has a leading vaccine operation with a strong pipeline of candidates expected next year. This includes the nirsevimab vaccine for respiratory syncytial virus and a fully liquid meningococcal vaccine. Its recent acquisition of Synthorx should also help to strengthen its pipeline. Like most pharmaceutical companies, SNY has also been working on a COVID-19 vaccine, which is on the fast track.
SNY has a strong history of earnings growth, with EPS up over 249% last year. The stock currently has a potential upside of 20.39%. SNY is rated a "Buy" in our POWR Ratings system, with a grade of "A" in Trade Grade and Peer Grade and a "B" in Buy & Hold Grade and Industry Rank. It is also the #19 ranked stock in the Medical – Pharmaceutical industry.
LKQ Corporation (LKQ)
LKQ is a leading global distributor of non-OEM automotive parts. These are replacement parts, components, and systems that are used to repair and maintain vehicles. As many people are avoiding public transportation, there has been a focus on buying and maintaining used cars. This drives up the demand for auto parts.
The company is also growing through strategic buyouts. LKQ acquires companies to expand its geographic footprint, improve its offerings, and adopt new technologies. For instance, its acquisition of Stahlgruber enhanced its presence in Europe and improved its procurement buying power. In response to the pandemic, LKQ made a series of cost-cutting initiatives such as layoffs, furloughs, and compensation cuts. These permanent cuts will improve its bottom line.
EPS for the company grew 38.7% over the last year, which is pretty impressive, especially as the company has an upside potential of 18.47%. The stock is rated a "Strong Buy" in our POWR Ratings system. It holds grades of "A" in Trade Grade and Buy & Hold Grade, and a "B" for Industry Rank. The stock is also ranked #5 in the "Auto Parts" industry.
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ALXN shares were trading at $123.76 per share on Tuesday afternoon, up $1.15 (+0.94%). Year-to-date, ALXN has gained 14.43%, versus a 14.49% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.4 Top Growth Stocks with Huge Upside Potential appeared first on StockNews.com